Features and Criteria for Credit Line Qualification

April 19, 2014 By Steven

Lines of credit are offered by big and small banks, credit unions, and other financial establishments. The main types are personal, business, and home equity lines of credit, available from mortgage lenders, online banks, and other entities.

Financial institutions offer products with tax-deductible interest and no annual fees, closing costs, and appraisal fees. While there are many benefits, banks have certain lending criteria and requirements. Applicants must provide information about their employer, length of employment, and previous residence. Lenders also require financial information such as your annual income, including pension and retirement income, bonuses, commissions, salary, etc. If applying for a home equity line of credit, you may want to list sources of additional income such as

separate maintenance,

child support, and

alimony.

If you own a home, you will be asked about your monthly payment, mortgage balance, market value, as well as the purchase price and date. It is best to apply with a lender that offers the full array of products, including investment solutions, insurance policies, and savings and checking accounts so that you have access to a wide selection of products and services.

Many financial institutions offer lines of credit and advertise beneficial features such as life insurance. They come in different varieties, including term and demand loans and overdraft protection. LOCs can be divided into secured and unsecured and standard and special purpose lines, which are designed for disadvantaged persons. The limit is based on different factors, including

income level,

credit score, and

outstanding balances

such as:

loans,

credit cards

mortgages.

The limit also depends on whether the LOC is unsecured or secured.

This is also a great way to pay off high interest credit cards, make home improvements and renovations, or consolidate multiple loans to get rid of debt faster. When you consolidate your debts, you make only one monthly payment and benefit from a competitive interest rate. One of the main benefits is that LOCs are safe and easy to use meaning that you can move funds between accounts, use an ATM, or write checks. for vacations, household appliances, electronics, equipment, and other items. You can draw on the line to replace your oven or dryer, pay medical bills and expenses, buy a vehicle, etc.

Another advantage is that the interest rate is lower than that of credit cards and other financial products. Lines of credit usually come with a variable rate that is tied to some index and changes with interest rate fluctuations. Other benefits for holders include low minimum amounts, quick approval, and immediate access to funds. Finally, this is a beneficial tool for borrowers who are looking for ways to build or rebuild credit.